Rising rents and slow income growth are making it harder for early-career renters to afford…
Rising rents and slow income growth are making it harder for early-career renters to afford housing, according to a new analysis from rental search platform HotPads.
In fact, the rent burden has grown more quickly for recent college graduates in 45 majors – including U.S. history, music, biology and early childhood education – than it has for renters without a four-year degree.
The current U.S. median rent is $1,535 per month, up 29.9 percent over the past 10 years.
In that time, the median income for early-career renters has grown 14.4 percent – the current median annual income is $40,673 for early-career renters with a four-year degree and $24,298 for those without one.
The amount of student debt in the United States has also more than doubled in the last 10 years – 62 percent of 18- to 29-year-old Bachelor’s degree graduates took on debt for their education in 2018, according to the Federal Reserve.
As rent prices outpace incomes, the rent burden has gotten worse – a typical recent graduate would have to spend 45.3 percent of his or her income to pay the median rent, up from 40.5 percent in 2009.
A typical renter without a four-year degree would spend 75.8 percent of each paycheck on the median rent, up from 67.9 percent in 2009.
When it comes to rent affordability, not all degrees are equal
U.S. history graduates have seen one of the largest changes in rent affordability in the past 10 years – their rent burden has grown by 22 percentage points as their early-career median annual income dropped 14.5 percent.
Recent graduates with music, biology and early childhood education degrees have seen less than 10 percent increases in their incomes over the past 10 years, and their rent burden grew by more than 10 percentage points in that time frame.
Experts typically recommend spending no more than 30 percent of annual income on housing. Nationally, only early-career graduates with one of 17 majors analyzed – including computer science and various engineering degrees – have a rent burden of 30 percent or less.
As renters spend more of their income on housing, many of them have found ways to cut back on expenses to lower their rent burden, such as getting roommates or moving back home with their parents.
Find out more at HotPads.com.